After being outbid by a consortium of four Australian ranchers and cattlemen, Australian Outback Beef (AOB), the joint venture formed between Gina Rinehart’s Hancock Prospecting and China’s Shanghai CRED has raised its bid for the S. Kidman cattle empire to $386.5 million.
The latest bid by AOB slightly exceeds the $386 million bid offered by the BBHO consortium comprised of Tom Brinkworth, Sterling Buntine, Malcolm Harris, and Viv Oldfield, and is $21.5 million more than Rinehart’s previous bid.
The S. Kidman Board of Directors has come forward expressing its recommendation that the company’s shareholders accept the raised AOB bid stating, “The Kidman directors have carefully considered the increased offer by AOB and have unanimously recommended that Kidman shareholders accept the offer in the absence of a superior proposal.”
Rinehart May Go Solo
Ms. Rinehart has even gone a step further to ease any reticence on the part of S. Kidman stating that if the joint venture offer is blocked by either Australia’s Foreign Investment Review Board (FIRB) or by regulatory bodies in China, she would proceed with the deal on her own.
“I stand behind the bid and should FIRB or [People’s Republic of China] approvals not be achieved, then Hancock will proceed with the acquisition on a 100 per cent basis,” said Rinehart.
“I hope this provides shareholders with significant comfort and that when they consider the offer they can do so in the knowledge that there is no FIRB or PRC execution risk, and further that we have the money to invest to properly maintain the stations and their hard-working staff.
BBHO is expected to make its own increased offer, however, as preferred bidder, Rinehart has the option to meet or exceed their bids.
“It’s a business transaction. Rinehart’s put the most money on the table, she’s got the support of the board and you would have to say she’s now in the driver’s seat,” business commentator, Tim Treadgold told ABC.
Business as a Whole
The BBHO syndicate members, who already run a combined 400,000 head of cattle across the country, state that each member would continue to run their own businesses, however, they plan to market their cattle through S. Kidman & Co.
“We’ve got properties quite close to the Kidman properties,” Buntine told ABC, adding, “We would be looking to break the properties up to complement our existing portfolios. It’s a more efficient use of staff and plant.”
Rinehart, in contrast, has stated that the business would not be broken up under her ownership – an important point to the S. Kidman Board.
“Under the Hancock JV offer the core Kidman business will remain intact and the Kidman staff and legacy will be looked after,” John Crosby, chairman of S. Kidman told AFR.
Over the past 18 months since S. Kidman was placed on the market, more than 600 interested parties have contacted the sale manager, Ernst & Young about a possible deal for the company that includes 10.1 million hectares of land and runs 185,000 head of cattle.
But, in the end, it will come down to who has the most buying power.
“Whether the other people come back and counter-counter-bid, we’ll have to wait and see,” said Tim Treadgold, “but at the moment it’s a pretty plain vanilla case of the most money wins.”
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Lynda Kiernan